Business Update. Handout. August 14, 2007

Transcription

1 Business Update Handout August 2007 August 14, 2007

2 Forward-Looking Statements Statements contained in this presentation about future performance, including, without limitation, earnings, asset and rate base growth, load growth, capital investments, and other statements that are not purely historical, are forward-looking statements. These forwardlooking statements reflect our current expectations; however, such statements involve risks and uncertainties. Actual results could differ materially from current expectations. Important factors that could cause different results are discussed under the headings Risk Factors and Management s Discussion and Analysis in Edison International s 2006 Form 10-K and subsequent reports filed with the Securities and Exchange Commission and available on our website: These forward-looking statements represent our expectations only as of the date of this presentation, and Edison International assumes no duty to update them to reflect new information, events or circumstances. 1

3 Use of Non-GAAP Financial Measures Edison International s earnings are prepared in accordance with generally accepted accounting principles used in the United States and represent the company s earnings as reported to the Securities and Exchange Commission. Edison International s management uses core earnings, which exclude earnings from discontinued operations and other non-core items, internally for financial planning and for analysis of performance. Edison International also uses core earnings as the primary performance measurement when communicating with analysts and investors regarding its earnings results and outlook, as it allows them to more accurately compare the company s ongoing performance across periods. A reconciliation of Non-GAAP information to GAAP information is included either on the slide where the information appears or on another slide referenced in the presentation. 2

4 Second Quarter Highlights Core earnings 1 $0.73 per share up 33%; reported earnings of $0.29 per share impacted by noncore items Results for Southern California Edison (SCE) on plan Strong operating performance for Edison Mission Group (EMG) Core earnings 2 guidance increased from $ $3.45 to $ $3.59 per share on a higher outlook for EMG SCE Update Submitted regulatory filings for $1.8 billion Tehachapi transmission project (June) and $1.3 billion in capital investment for Edison SmartConnect TM (July) Tendered 2009 General Rate Case notice of intent (July) with final application to be filed in November consistent with 12% rate base growth DPV2 transmission project denied by Arizona Corporation Commission (ACC); SCE is evaluating its options on how best to advance the project EMG Update Strong operating performance and strengthening capacity market Placed into service the largest wind project to date, Wildorado (161 MW), located in Texas Additional wind projects placed into construction, turbine commitments increased, and development pipeline expanded 1 See second quarter segment highlights for reconciliation of core earnings to reported earnings. 2 See earnings guidance for reconciliation of core earnings guidance to total earnings guidance. 3

5 Edison International Value Drivers EIX Integrated Platform SCE Value Drivers Strong customer and load growth Tight system reserve margins keep focus on reliability Proposed $17 billion, 5-year capital investment plan 1 51% - Expand and strengthen distribution system 25% - New transmission for system reliability and renewables 15% - San Onofre steam generators and other generation 8% - Edison SmartConnect TM metering program 1% - Five small generation units ( Peakers ) Strengthened regulatory framework Three-year forward rate-setting Cost of capital Procurement cost recovery mechanisms Financial performance Earning assets expected to grow 12%+ annually over the next five years from EMG Value Drivers Low-cost coal generation portfolio Adjusted EBITDA exceeds $1 billion annually 2 Strong operational and marketing/trading capabilities Focus on optimizing and stabilizing merchant margins Experienced/value-added trading capability Effective allocation of cash New generation investments Hedging collateral Phased environmental compliance Diversify and grow the generation portfolio Focus on development of non-coal projects with long-term contracts, regional diversity Renewables Thermal natural gas IGCC 1 Subject to timely receipt of permitting, licensing and regulatory approvals. See SCE growth driver-investment for further information. 2 See Edison Mission Group adjusted EBITDA for reconciliation to net income adjusted EBITDA calculation based on mid-point of EMG guidance range. 4

6 Southern California Edison (SCE) An Investor-Owned Electric Utility 5

7 SCE Value Driver System Growth MW 90,000 80,000 70,000 60,000 50,000 26,000 22,000 18,000 14,000 10,000 63,463 SCE Growth 1 New Meter Connections 73,204 77,437 83, Forecast 18,821 Peak Demand 20,136 87,708 20,762 21,934 22,889 75,626 23, Forecast SCE s service territory has 4 of the 10 fastest growing counties in the nation 2 5 of the 25 fastest growing cities in the nation 3 New meter connections Expect to be 75,626 in ,791 meters added in the past 5 years Home remodeling and population gains in high-temperature regions contribute to growth Peak Demand In July 2006 peak demand 22,889 MW 4.4% growth from 2005 peak 10.2% higher than 2004 peak Strong customer and load growth keeps statewide focus on the need to expand and strengthen the utility infrastructure figures projected for full-year. 2 LA, Riverside, San Bernardino and Orange counties. US Census Bureau data, in terms of population increase between 2000 and Moreno Valley, Rancho Cucamonga, Irvine, Lancaster and Fontana. US Census Bureau data, in terms of population percentage increase between 2004 and

8 SCE Value Driver Reliability State law requires that SCE serve 20% of its customers electricity needs with renewable energy by 2010 SCE s current renewable portfolio (2006 data) Renewable resources ~13 billion kwh Represents ~17% of customer power deliveries SCE s 2010 renewable resources target ~16 billion kwh Completed four renewable power solicitations to date; 2007 solicitation to be finalized by 2Q08 SCE the nation s leading renewable energy purchaser in 2006 Agreement with Alta Windpower Development LLC Secures at least 1,500 MW of power, more than doubling SCE s wind portfolio The wind project, when completed, will be twice the size of the largest wind project in the U.S. Projects to be built in the Tehachapi area of CA Expanded Geothermal Agreement with Calpine SCE expanded agreement to purchase 225 MW of geothermal energy for 10 years SCE entered into a new agreement for 714 MW of non-renewable capacity for SCE signs largest wind energy contract in U.S. history & expands geothermal agreement 7

9 SCE Value Driver Reliability All-Source RFO Contracts totaling up to 3,450 MW were executed in January 2007 Contracts cover and include energy and capacity New all-source RFO seeking resources for was launched in August 2007 and is expected to close in October 2007 New Generation RFO Solicited up to 1,500 MW of new IPP generation 1,205 MW has been awarded Summer 2007 Track NRG received a 10-year PPA to provide 260 MW Project in-service in August 2007 Fast Track On-line by August 2010 Blythe Energy and Competitive Power Ventures each received 10-year PPAs for 490 and 455 MW, respectively CPUC decision expected in September 2007 Standard Track On-line by August 2013 Shortlist notification June 2007 Notification of successful offers in January 2008 In December 2007 the CPUC is expected to determine if additional procurement may be necessary in its upcoming Long-Term Procurement Plan decision CPUC has provided cost recovery assurance SCE leadership in securing long-term power needs 8

10 SCE Value Driver Reliability SCE is committed to creating, transmitting and improving end-use efficiency of electricity in an environmentally responsible manner During the past 5 years, SCE has Saved more than 4 billion kwh enough energy to power 500,000 homes for an entire year Reduced greenhouse gas emissions by more than 2 million tons the equivalent of removing 250,000 cars from the road During the next 2 years, SCE will Help customers save an additional 2 billion kwh, reducing greenhouse gas emissions by another 1 million tons SCE offers a wide array of energy efficiency and demand response programs which offer financial incentives and/or other benefits for saving energy and shifting usage from on-peak periods Time-of-Use (TOU) rates, load management programs and energy management systems (EMS) are some of the many programs offered Regulatory mechanisms mitigate the revenue impact of changes in electricity sales Recognized as a leader in energy efficiency by U.S. EPA & DOE 9

11 SCE Growth Driver Investment $ Billions $5 $4 $3 $2 $1 $0 Proposed Five-Year Capital Spending Plan $3.9 $4.2 $4.0 $2.8 $ Forecast by Classification $ % Edison SmartConnect TM Generation Transmission Distribution Total Current Forecast by Proceeding $ % CPUC Rate Cases CPUC Project Specific FERC Rate Cases Total Five-year spending plan emphasizes infrastructure replacement, renewables transmission, demand growth and energy efficiency (e.g. Edison SmartConnect TM ) 1 Subject to timely receipt of permitting, licensing and regulatory approvals. Forecast is as of March 2007 and includes about $600 million of capital spending for DPV2, the majority of which was expected to occur in 2008 & Arizona Corporation Commission (ACC) denied approval of the DPV2 project on May 30, 2007 and SCE is evaluating its options for the project. However, the denial may result in a delay of the project. Inclusion of Mountainview power plant in rate base per SCE 2009 GRC NOI not included (no material earnings impact). 10

12 SCE Growth Driver Investment $ Billions $21 $18 $15 $12 $9 $6 $3 $0 Forecast SCE Rate Base % Compound Annual Growth Rate $20.4 $17.6 $14.5 $10.9 $11.7 $ Approved 2009 GRC Rate base growth provides foundation for strong SCE earnings and cash flow growth while meeting customer service and infrastructure objectives 1 Includes impact of 2006 CPUC and 2006 FERC GRC decisions and forecasted rate base for FERC ( ) and CPUC ( ) which are subject to timely receipt of permitting, licensing and regulatory approvals. Forecast is as of March 2007 and includes about $600 million of capital spending for DPV2, the majority of which was expected to occur in 2008 & Arizona Corporation Commission (ACC) denied approval of the DPV2 project on May 30, 2007 and SCE is evaluating its options for the project. However, the denial may result in a delay of the project. Inclusion of Mountainview power plant in rate base per SCE 2009 GRC NOI not included (no material earnings impact). 11

13 SCE Value Driver Capital Investment Tehachapi transmission line to interconnect up to 4,500 MW of generation New transmission needed to strengthen system reliability and access economical power CALIFORNIA Los Angeles Serrano Santa Ana San Diego NEVADA Midway Tehachapi SCE (PG&E) Windhub Service Territory Antelope Palmdale Lugo Vincent Santa Clarita Rancho Pardee Vista Mira Loma Valley Las Vegas Eldorado Mohave Devers Palm Springs ARIZONA Phoenix Palo Verde Project Name Phase In-Service (Millions) 1 Renewables Tehachapi Segments 1-3 Licensing Ending Tehachapi Segments 4-11 Licensing Starting ,504 Other Renewable Projects Licensing Starting Various 343 Total Renewables 2,102 Reliability Rancho Vista Substation Construction Other Reliability Projects Various Various 1,351 Total Reliability 1,564 Economics DPV2 Licensing Ending Existing 500kV DPV2 & Rancho Vista 500kV Tehachapi Segments kV Tehachapi Segments kV GRAND TOTAL 4,253 SCE leadership in new transmission to support system reliability and renewable energy 1 Subject to timely receipt of permitting, licensing and regulatory approvals. Forecast is as of March CAISO, CPUC approvals received; USFS approval for Segment 1 pending. 3 CAISO, CPUC, USFWS and Arizona Siting Commission approvals received. Arizona Corporation Commission (ACC) denied approval of the DPV2 project on May 30, 2007 and SCE is evaluating its options for the project. However, the denial may result in a delay of the project. 12

14 SCE Value Driver Capital Investment Five Black Start Peakers Initiated in August 2006 at the CPUC s request Capital Investment forecast at $275 million $179 million spent or firmly committed through June 30 Four of five units were placed online in August 2007 Oxnard peaker permit denied by the City of Oxnard; SCE is appealing to Coastal Commission and expects a decision in 4Q07 San Onofre Nuclear Generation Station 2,150 MW total (SCE share 78.21%) Unit 2 SGR in service 2010 and Unit 3 SGR in service 2011 $0.5 billion SGR project costs (SCE share) for SCE responds to peak demand with up to 225 MW in new peaker capacity CPUC approved SONGS 2 & 3 steam generator replacement 13

15 SCE Value Driver Edison SmartConnect TM 2005 Current Schedule Design Phase Pre-Deployment Phase Deployment Phase Schedule Pre-deployment, which began in January 2007, included field testing with 5,000 homes and small businesses Field testing is underway in the summer of 2007 under $45 MM Phase II CPUC authorization granted in July 2007 Phase III application filed July 2007 to deploy to 5.3 million residential and small commercial customers between ; total cost estimate $1.7 billion, of which $1.3 billion is capital cost to be included in rate base 1 Edison SmartConnect TM has the potential to reduce peak power consumption by as much as 1,000 MW Vendor Candidates emeter to provide the meter data management system to support customer billing, energy information and utility operations Corix Utilities selected to provide meter installation services IBM will serve as the system integrator for Edison SmartConnect TM, managing the development and integration for the network management and meter data management system Meter Candidates: Itron, Landis + Gyr Communications Infrastructure Candidates: Cellnet, Itron, Sensus SCE leadership in advanced metering infrastructure 1 Subject to CPUC Approval. 14

16 Constructive Regulatory Environment Rate Base General Rate Case (GRC) provides three-year forward looking rate-setting mechanism based on forecast spending; affirmed twice 2006 GRC Decision approved majority of capital requests and operating expenses 2006 GRC Decision results in increased depreciation providing annual cash flow of about $1 billion for Tendered 2009 GRC Notice of Intent in July 2007 with final application to be filed in November 2007 Investors Return 11.6% return on common equity (ROCE) approved through % ROCE requested May 2007 in 2008 Cost of Capital application to be effective January 2008 (subject to CPUC review and approval) Energy Efficiency CPUC preliminary decision on energy efficiency economic savings sharing issued in August 2007; final decision expected in September 2007 Procurement Cost Energy Resources Recovery Account (ERRA) and related Trigger Mechanism provides timely recovery of procurement costs and mitigates energy price exposure Customer Rates Rate increases expected in base rates (i.e. GRC) as the results of new rate base growth generation rates to increase due to the projected reduction in ERRA over collections. California s regulatory framework has been strengthened to support growth and reliability needs, and mitigate risks of volatile commodity prices 15

17 Edison Mission Group (EMG) A Competitive Power Generation Company 16

18 EMG Growth Driver Operating Platform Washington Iowa Minnesota Illinois Natural Gas 70 MW Wind 145 MW Wind 75 MW/70 MW (UC) Natural Gas 305 MW Coal 5,613 MW Wyoming Wind 61 MW (UC) California Natural Gas 964 MW Pennsylvania Coal 1,884 MW Wind 67 MW (UC) West Virginia Coal 40 MW New Mexico Wind 90 MW Oklahoma Wind 95 MW (UC) Texas Wind 161 MW EMG Generation Fuel Mix 1 MW % Coal 7,537 79% Natural Gas 1,339 14% Wind 471 5% Other 153 2% 9, % 1 Excludes 293 MW wind projects under construction (UC); natural gas includes oil-fired; other includes Doga in Turkey (144 MW) and Huntington biomass (9 MW) which are not shown. Data as of June 30,

19 EMG Key Value Drivers Low-cost coal generation driver for strong EBITDA EMG adjusted EBITDA in excess of $1 billion for last two years, also forecasted for Strong operational and marketing/trading capabilities Effective management of fuel, transportation, and emissions to protect gross margins More efficient and expanding market/hedging opportunities Experienced/value adding trading business Long-term environmental plan for Midwest Generation Financial flexibility with simplified capital structure EMG liquidy 2 $2.3 billion as of June 30, 2007 Recent financing eliminates near-term maturities and high interest rate notes Expanding capital expenditures $1.9 billion estimated through 2009 Expansion and diversification goals Larger scale and operational efficiencies Greater diversification of generation technology and fuel type Bias towards development, contract vs. merchant, low emission technologies Focus areas renewables, natural gas, IGCC 1 See Edison Mission Group adjusted EBITDA for reconciliation to net income adjusted EBITDA calculation based on mid-point of EMG guidance range. 2 See EMG liquidity profile. 18

20 Midwest Generation Operating Performance YTD 2007 vs. YTD 2006 Generation up 16% Capacity and load factors increased on higher off-peak sales Availability and forced outage rates in line with plan $60 All-in average realized price increased by about $6 per MWh YTD compared to the same period last year All-in Average Realized Prices 1 $47.93 $53.53 $46.85 $52.81 $40 Operating Statistics YTD YTD Total Generation (GWh) 14,756 12,738 Equivalent Availability 74.7 % 76.4 % $/MWh $20 $34.51 $39.71 $33.71 $39.68 Capacity Factor 60.5 % 52.3 % Load Factor 81.1 % 68.4 % Forced Outage Rate 6.0 % 5.0 % $0 $13.42 $13.82 $13.14 $ Q 06 2Q 07 YTD 06 YTD 07 Average realized gross margin ($/MWh) 2 Average fuel and emission costs ($/MWh) 1 Includes the price of energy, capacity, ancillary services, etc. 2 Average realized gross margin is equal to all-in average realized prices less average fuel and emission costs. 19

21 Homer City Operating Performance YTD 07 vs. YTD 06 Generation up 20% 2006 availability and forced outage rates impacted by the Unit 3 transformer failure 2007 operating performance in line with plan $60 All-in average realized price increased by over $8 per MWh YTD compared to the same period last year All-in Average Realized Prices 1 $48.61 $56.44 $49.55 $58.14 Operating Statistics YTD YTD Total Generation (GWh) 6,453 5,387 Equivalent Availability 85.0 % 73.1 % Capacity Factor 78.7 % 65.7 % $/MWh $40 $20 $24.48 $34.82 $25.52 $36.42 $24.13 $21.62 $24.03 $21.72 Load Factor 92.6 % 89.9 % Forced Outage Rate 3.9 % 22.8 % $0 2Q 06 2Q 07 YTD 06 YTD 07 Average realized gross margin ($/MWh) 2 Average fuel and emission costs ($/MWh) 1 Includes the price of energy, capacity, ancillary services, etc. 2 Average realized gross margin is equal to all-in average realized prices less average fuel and emission costs. 20

22 EMG Hedge Program Status Remainder of Hedge Program Status at June 30, Midwest Generation Energy Only Contracts GWh 8,250 10,838 2,048 Average price/mwh $48.07 $61.38 $60.00 Load Requirements Services Contracts Estimated GWh 4,072 5,613 1,632 Estimated average price/mwh $64.35 $64.01 $63.65 Total Estimated GWh 12,322 16,451 3, Coal under contract (millions of tons) Homer City Megawatt hours (in GWh) 3,820 7,232 2,048 Average price ($/MWh) $64.29 $60.85 $71.05 Coal under contract (millions of tons) The amount of power sold is a portion of the retail load of the purchasing utility and can vary significantly with variations in that retail load. Retail load depends upon a number of factors, including the time of day and year, and the utility s number of new and continuing customers. Estimated MWh have been forecast based on historical patterns and on assumptions regarding the factors that may affect retail loads in the future. The actual load will vary from that used for the above estimate, and the amount of variation may be material. 2 The average price per MWh, which is subject to a seasonal price adjustment, represents the sale of a bundled product that includes, but is not limited to, energy, capacity and ancillary services. Also, Midwest Generation will incur charges from PJM as a load-serving entity. Thus, the average price per MWh is not comparable to the sale of power under an energy only contract. The average price per MWh represents the sale of the bundled product based on an estimated customer load profile. 21

23 EMG Capacity Sales Status at July 27, 2007 July 1, May 31, 2008 June 1, May 31, 2009 Midwest Homer Midwest Homer Megawatts except price per MW-day Generation City Generation City INSTALLED CAPACITY 5,918 1,884 5,918 1,884 Less: Net capacity held due to load requirements services contracts 1, and retained for outages (2,793) (228) (1,755) (183) NET CAPACITY AVAILABLE FOR SALE 3,125 1,656 4,163 1,701 Fixed Price Capacity Sales RPM Auction Process Net Capacity Sold 2, , Price per MW-day $ $ $ $ Non-unit Specific Capacity Sales Net Capacity Sold Price per MW-day $ $ $ $ Variable Capacity Sales Third Party Transaction Capacity Price per MW-day 2 $ $ $ $ TOTAL CAPACITY SOLD 3,125 1,656 4,163 1,701 AVERAGE PRICE PER MW-DAY $ $ $ $ Load requirements services contracts include energy, capacity and ancillary services. 2 Actual contract price for Homer City sale is a function of NYISO capacity auction clearing prices. Capacity price per MW-day is based on forward over-thecounter NYISO prices at July 27,

24 EMG Operational, Marketing and Trading Capabilities Maximize forward sales opportunities as markets evolve Originally focused on bilateral agreements Market transitioning to bilateral agreements without collateral requirements Illinois Auction (winning supplier: 17- and 29- month tranches) Expanding trading and hedging footprint beyond PJM RPM settlement provides new option to sell capacity EMMT provides opportunistic trading revenues Leverage knowledge gained from managing merchant 200 coal fleet 150 Trading primarily transmission congestion products and 100 electricity basis spreads $195 $130 Controls on types and sizes of exposures Allowed products and region (large majority of positions are low risk congestion contracts) VaR, volumetric, duration and credit limits 50 0 $ EMMT Trading Revenue ($ MM pre-tax) Edison Mission Marketing and Trading provides significant incremental income from trading activity 23

25 EMG Growth Driver Recapitalization $2.7 billion EMG refinancing Favorable market conditions Enhanced financial flexibility Moves refinancing risk past environmental spending period Simplifies capital structure Facilitates longer-term hedging Expands liquidity Tender premium and other non-core 1 costs: $0.45 per share Interest savings: $0.07 per share in 2007, $0.11 per share annualized 2007 Edison Mission Energy Debt Financing $1,200,000, % Senior Notes due 2017 $800,000, % Senior Notes due 2019 $700,000, % Senior Notes due See second quarter segment highlights for reconciliation of core earnings to reported earnings. 24

26 EMG Midwest Gen Environmental Agreement Comprehensive agreement addresses mercury, NOx, and SO2 emissions Achieves specified emission reductions through retrofits or unit shutdowns Mercury 90% removal by 2015 NOx emissions of 0.11 lbs. per million Btus by 2011 (66% reduction) SO2 emissions of 0.11 lbs. per million Btus by 2019, with interim step downs (78% reduction) Helps continue good relationships with key constituents and regulators and supports growth Agreement supported by Gov. Blagojevich, City of Chicago, and several influential environmental and community groups Illinois EPA assistance with IGCC and wind development, permit approvals Emission credit selling allowed Agreement filed under Illinois State Implementation Plan of CAIR Provides reasonable certainty of amount & timing of emission reductions through

27 EMG Environmental Compliance MWG Compliance Plan Phase 1 Reduction of Mercury Emissions Installation of Activated Carbon Injection (ACI) technology by July 2009 Estimated cost approx. $60 million Phase 2 Reduction of NOx Emissions Installation of primarily Selective Catalytic Reduction (SCR) systems by the end of 2011 Estimated cost approx. $450 million 2 Phase 3 Reduction of SO Emissions Flue Gas Desulfurization (FGD) technology Estimated cost $2.2 $2.9 billion Shutdown of Small Units Waukegan 6 (100 MW) by end of 2007 Will County 1 & 2 (310 MW) by end of 2010 Homer City Compliance Plan PA State Implementation Plan for CAMR and CAIR adopted Homer City will comply with 2010 phase of mercury requirements by installing ACI on Units 1 & 2 Evaluating compliance approaches for 2015 phase EMG environmental compliance plan allows assessment of market conditions before incurring capital expenditures Note: Cost estimates are in 2006 dollars. 26

28 EMG Wind Energy Development Strategy & Portfolio Wind Energy Development Strategy Strategic Importance to Growth Plan Contributes to portfolio diversification Objective is to attain national scope and leadership scale Leverages successful wind energy experience to date Wind Energy Provides Attractive Opportunities Growing RPS requirements and national desire for renewables Production tax credits Accelerated depreciation (MACRS) over 5 yrs. Mainly long-term contracts for output Wind Project Portfolio & Development Pipeline Projects 1 No. of Projects MW In-Service Under Construction Total Projects Development Pipeline ,103 Turbines Pipeline of over 3,100 MWs under exclusive development agreements Extensive prospect list supports further growth of development pipeline Purchased and option for 1,414 MW of turbines for delivery Purchased and under option 1,414 1 Data as of June 30, 2007; turbines purchased or committed to support development pipeline 2 Owned or under exclusive agreements. 27

29 EMG Wind Projects and Pipeline Nebraska Pipeline 100 MW Wyoming Construction 61 MW Pipeline 80 MW Utah Pipeline 90 MW Oklahoma Construction 95 MW Pipeline 300 MW Nevada Pipeline 315 MW New Mexico In-Service 90 MW Pipeline 60 MW Texas In-Service 161 MW Pipeline 630 MW Iowa In-Service 145 MW Pipeline 200 MW Minnesota Wisconsin Maine In-Service 75 MW Pipeline 100 MW Pipeline 54 MW Construction 70 MW Pipeline 169 MW Illinois Pennsylvania Pipeline 390 MW Construction 67 MW Pipeline 60 MW New York Pipeline 130 MW Maryland Pipeline 80 MW West Virginia Pipeline 345 MW EMG Wind Portfolio 1 MW In-Service 471 Construction 293 Development Pipeline 3,103 Turbines (not shown) 1,414 ~3,100 MW development pipeline in 16 states 1 Data as of June 30, 2007; turbines purchased or committed to support development pipeline. 28

30 EMG Growth Driver - Thermal Natural Gas-Fired Generation Thermal development (1,000 MW) Walnut Creek and Sun Valley, CA opportunities (500 MW each) in permitting and engineering stage SCE and other potential customers Potential acquisitions of assets or portfolios Will be selective and disciplined Some regions showing developing capacity markets and higher spark spreads Assets complement marketing and trading skills IGCC with Carbon Sequestration Carson Hydrogen Project ( MW) Joint Venture with BP at their Carson City refinery Confirming project economics and CO 2 requirements Target operating date Other opportunities in early stage development 29

31 Appendix 30

32 Second Quarter Financial Results Reconciliation of Core Earnings to Reported Earnings Core Earnings 2Q 07 2Q 06 Var. SCE $ 0.44 $ 0.47 $ (0.03) EMG EIX Holding Co. (0.01) (0.02) 0.01 Core EPS $ 0.73 $ 0.55 $ 0.18 Non-Core Items SCE $ $ 0.25 $ (0.25) EMG (0.44) (0.26) (0.18) Total Non-Core $ (0.44) $ (0.01) $ (0.43) Basic EPS $ 0.29 $ 0.54 $ (0.25) Diluted EPS $ 0.28 $ 0.54 $ (0.26) Core Earnings Variances SCE Primarily due to the catch-up adjustment upon receipt of the GRC decision in May of last year, partially offset by the favorable resolution of an outstanding state income tax issue EMG Midwest Generation Primarily higher energy margin, driven by higher generation and higher average realized prices, and lower net interest expense, partially offset by higher planned maintenance costs Homer City Higher energy margin, driven by higher generation and higher average realized prices, offset by higher planned maintenance costs in 2007 and estimated insurance recovery in 2006 related to Unit 3 outage Edison Capital Gains on global infrastructure fund investments, lower taxes and other Other Non-Core Variances SCE 2006 includes the resolution of an outstanding issue involving a portion of revenue collected during related to state income taxes. EMG Results include per share charges of $0.45 and $ for early debt extinguishment in 2Q 07 and 2Q 06, respectively, and $0.01 from discontinued operations in both periods. 31

33 Year-to-Date Financial Results Reconciliation of Core Earnings to Reported Earnings Core Earnings YTD 07 YTD 06 Var. SCE $ 0.90 $ 0.84 $ 0.06 EMG EIX Holding Co. (0.05) (0.06) 0.01 Core EPS $ 1.63 $ 1.10 $ 0.53 Non-Core Items SCE $ 0.10 $ 0.25 $ (0.15) EMG (0.44) (0.03) (0.41) Total Non-Core $ (0.34) $ 0.22 $ (0.56) Basic EPS $ 1.29 $ 1.32 $ (0.03) Dilulted EPS $ 1.29 $ 1.32 $ (0.03) Core Earnings Variances SCE Mainly due to higher revenue associated with the GRC decision and lower taxes from the favorable resolution of an outstanding state income tax issue EMG Midwest Generation Primarily higher energy margin, driven by higher generation and higher average realized prices, and lower net interest expense, partially offset by higher planned maintenance costs Homer City Primarily higher energy margin, driven by higher generation and higher average realized prices, partially offset by higher planned maintenance costs in 2007 and estimated insurance recovery in 2006 related to Unit 3 outage Edison Capital Predominantly gains on global infrastructure fund investments Non-Core Variances SCE YTD 07 $0.10 reflecting progress made with the IRS related to the income tax treatment of certain environmental remediation costs; YTD 06 $0.25 related to the resolution of an outstanding issue involving a portion of revenue collected during related to state income taxes EMG YTD 07 and YTD 06 include ($0.45) and ($0.27) per share for early debt extinguishment charges, and $0.01 and $0.24 per share primarily from proceeds from discontinued operations related to Lakeland, respectively. 32

34 Earnings Guidance Reconciliation of Core Earnings Guidance to Total Earnings Guidance Core EPS 2007 Guidance 2007 Guidance Effective Updated 05/09/07 08/09/07 Southern California Edison $ $2.07 $ $2.07 Edison Mission Group EIX Holding Company (0.13) (0.13) Core $ $3.45 $ $3.59 Non-Core Item 1 Southern California Edison Edison Mission Group (0.45) (0.44) Total Non-Core Items (0.35) (0.34) Total $ $3.10 $ $ non-core items reflect refinancing costs of ($0.45) for EMG and a tax benefit of $0.10 for SCE. The 2007 guidance effective 08/09/07 also reflects $0.01 from discontinued operations. 33

35 Edison Mission Group Adjusted EBITDA Reconciliation to Net Income ($ Millions) Net Income Add back (Deduct): Cumulative effect of change in accounting, net of tax Income taxes Discontinued operations Income (loss) from continuing operations Interest expense Interest income Depreciation and amortization EBITDA 1, Production tax credits Discrete items: Loss on lease, asset impairment and other Impairment of equity method investment Gain on sale of assets Loss on early extinguishment of debt Adjusted EBITDA 1 Represents the mid-point of the EMG guidance range. 2 Production tax credits (PTC) are after tax numbers Actual $ (30) (74) $ 1, Actual $ 432 (1) (97) (118) (22) 146 $ 1, Forecast $ 354 (5) (82) $ 1,169 1 Note: EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. Adjusted EBITDA includes production tax credits from EMG s wind projects and excludes amounts from gain on the sale of assets, loss on early extinguishment of debt and leases, and impairment of assets and investments.

36 EMG Liquidity Profile Available Liquidity Sources ($ Millions) 12/31/06 6/30/07 EME Revolver MWG Revolver Cash & Short term investments 1 $ ,181 $3,149 $ ,321 $2,310 $1.1 billion of credit facilities between MWG and EME 1 Excludes $73 million and $192 million of cash collateral held by counterparties at 12/31/06 and 6/30/07, respectively. 35

37 EMG Capital Expenditures $ Millions 650 Planned Expenditures 1 July Plant/Corporate Capex Plan Environmental Plan Growth Commitments Potential Expenditures ( ) Additional growth opportunities Additional wind turbines Balance of plant costs for purchased wind turbines 325 Potential Expenditures After 2009 Midwest Generation environmental spending plan Evaluating FGD installation at Homer City Additional growth opportunities Total $1,883 Million 1 EME expects to make substantial investments in new projects during the next three years. As of June 30, 2007, EME had a development pipeline of potential wind projects with an installed capacity of approximately 3,100 MW (the development pipeline represents potential projects which EME either owns the project rights or has exclusive negotiation rights). Completion of these projects is dependent upon a number of items which may include, depending on the project s status, completion of a power sales agreement, permits, an interconnection agreement or other agreements necessary to start construction. Additional projects may from time to time be added to the development pipeline, and there is no assurance that the projects included in the development pipeline currently or added in the future will lead to the successful completion of a wind project. 36